DESCRIPTION: (Provided by the Applicant) Prior research suggests that restricted formularies--i.e., policies excluding certain drugs from the list of drugs available--offer considerable potential for improving the cost-effectiveness of health care delivery; but research also suggests that the payoff to formulary restrictions depends on voluntary compliance by physicians. The goal of this project is therefore to understand the conditions under which formulary restrictions are accepted versus resisted by physicians. Drawing on organizational justice theory, we will focus on the role of physicians' assessments of the fairness of formulary restrictions. The study will test the hypothesis that physicians are more likely to accept restricted formularies when they believe that formulary processes and outcomes are fair. The study will proceed in phases. First, we will survey hospital pharmacy directors in New York state about formulary restrictions in the hospitals where they work. Then based on the information provided by the pharmacy directors, we will contact cardiovascular specialists and pulmonary specialists practicing in the same hospitals and ask them about their attitudes toward, and their assessment of, the fairness of these formulary restrictions. Finally we will analyze how these physicians' attitudes toward formulary restrictions influence hospital cost efficiency using the New York State Inpatient Database. The findings from this study are expected to shed new light on the determinants of physicians' compliance with formulary restrictions and on the appropriate design of formulary restriction policies in health care organizations.